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Seattle SuperSonics relocation to Oklahoma City

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The interior of the KeyArena during the Sonics last home game of the 2007-08 NBA season, played against the Dallas Mavericks.

The Seattle SuperSonics possible relocation to Oklahoma City is an effort by the ownership group of the Seattle SuperSonics to move the team to Oklahoma City. If successful, the team would become the third NBA franchise to relocate in the past decade.

After failed efforts to persuade Washington government officials to provide funding to update KeyArena, the NBA's smallest arena, the SuperSonics' ownership group led by Howard Schultz sold the team to Professional Basketball LLC (PBC), a group headed by Oklahoma City businessman Clayton Bennett. After asking local governments to fund a $530 million arena complex, the group notified the NBA that it intended to move the team to Oklahoma City and requested arbitration with the City of Seattle to be released from the lease with KeyArena. When the request was rejected by a judge, the City of Seattle sued Bennett's ownership group to enforce the lease that requires them to play in Key Arena through 2010.

In 2008, the release of emails sent among the ownership group showed that showed at least some of the members were talking about moving the team to Oklahoma City prior to the purchase in 2006. In response, the city accused the ownership of failing to negotiate in good faith and former owner Schultz filed a lawsuit asking the court to rescind the sale and take control of the team based on charges of fraud and misrepresentation. Bennett's attorney's filed a motion accusing the city of duplicity, and said that the city had deliberately attempted to increase the cost of the move, and force them to sell to a local ownership group led by Microsoft CEO Steve Ballmer. In April 2008, the move was given approval by the NBA Board of Governors pending the outcome of litigation over the lease and ownership of the team. The NBA must vote again if the Sonics are not able to move before the 2008-2009 season.

Sale of team

On July 18, 2006, the Basketball Club of Seattle, led by Howard Schultz, sold the Seattle SuperSonics and Seattle Storm after failing to reach an agreement with the City of Seattle over a publicly-funded $220 million expansion of KeyArena, which was constructed in 1995, and is now the NBA's smallest venue, seating 17,098 for basketball. The sale to Clay Bennett's group for $350 million was approved by NBA owners on October 24, 2006. Terms of the sale required the new ownership group to "use good faith best efforts" for the term of 12 months in securing a new arena lease or venue in the Greater Seattle Area.

On February 12, 2007, Bennett proposed using tax money to pay for a new $530 million arena in a Seattle suburb.. After failing to reach a deal by the end of the legislative session, Bennett gave up his attempt in April of 2007 and on November 2, 2007 said that the team would move to Oklahoma City as soon as they could get free of the Key Arena lease. Seattle's mayor, Greg Nickels, replied that the Sonics were expected to stay in Seattle until their lease expired in 2010, but that the city remained open to expanding KeyArena. Over concerns that the city would accept a buyout of the lease, a grassroots group filed a citywide initiative that sought to prevent the city from accepting such an offer from Bennett's group. The Seattle City Council later unanimously passed an ordinance modeled after the initiative.

On August 13, 2007, Aubrey McClendon, a minor partner of the ownership group, said in an interview that the team was not purchased to keep it in Seattle but to bring it to Oklahoma City. Bennett later denied such intentions, saying McClendon "was not speaking on behalf of the ownership group". Due to his comments, McClendon was fined $250,000 by the NBA.

Relocation effort

KeyArena, built in 1995, has become the smallest venue in the NBA, seating 17,072.

On September 21, Bennett applied for arbitration on the issue of whether the team could break its lease in 2008. Since the lease does not allow for arbitration on the issue of occupancy, the City of Seattle filed on September 24 for declaratory relief in King County Superior court requesting that the court issue a judgment enforcing the Specific Performance Clause, rejecting the arbitration request, and the awarding of legal fees as spelled out in the agreement. On October 29, The US District Court Judge Ricardo Martinez denied the request for arbitration, saying that the "arguments ignore the clear language of Article II which states that PBC’s use and occupancy rights with respect to the Premises and the Term of this Agreement shall end on September 30, 2010.”

When Bennett's October 31, 2007 deadline passed for public financing of a new arena, he informed NBA commissioner David Stern on November 2,2007 that the ownership group intends to move the Sonics to Oklahoma City once the team is free of its KeyArena lease. The timing of the announcment, 5 months before the deadline to file and at the start of the NBA season drew critical comments from Tom Carr, Seattle City Attorney, who said "Mr. Bennett's announcement today is a transparent attempt to alienate the Seattle fan base and follow through on his plan to move the team to Oklahoma City. ... Making this move now continues the current ownership's insulting behavior toward the Sonics' dedicated fans and the citizens of the city."Bennett also reiterated that the team was not for sale and dismissed attempts by local groups to repurchase the team.

On February 15, 2008, the Sonics' ownership group gave the City of Seattle a one-day deadline to accept a $26.5 million offer that would buyout the Sonics' lease in KeyArena and pay off what the ownership group claimed was the value of debts on the arena. The city rejected the offer.

The prospect of expanding KeyArena resurfaced on March 6, 2008, when Microsoft CEO Steve Ballmer promised that his investor group would pay half of the $300 million needed for an extensive renovation; the rest was to be provided by the city and county. However, when the state did not give approval for the county to provide funds by an April 10 deadline, Seattle mayor Greg Nickles said that the effort had failed and the city's hopes rested in its lawsuit.

The Ford Center, which seats 19,599 for basketball, was built in 2002 and has received public funding for renovation.

Oklahoma City's preparations

In anticipation of an NBA team, Oklahoma City voters approved a $120 million renovation of the Ford Center on March 3, 2008, including construction of a new NBA practice facility. After a tour of downtown Oklahoma City, a subcommittee of three NBA owners recommended that the league approve the move. On March 14, Bennett reached a preliminary agreement with Oklahoma City on a 15-year lease of the Ford Center, which would be presented to the city council and become official upon termination of the Key Arena lease. The Oklahoma City Council and Sonics’ ownership finalized a lease agreement two weeks later, which included a provision that the team use “Oklahoma City” in its team name. The Oklahoma State Legislature later approved a bill to provide tax breaks and other incentives if the team relocated.

NBA owners gave approval of a potential Seattle SuperSonics' relocation to Oklahoma City on April 18, 2008 in a 28-2 vote by the league's Board of Governors, with only Mark Cuban of the Dallas Mavericks and Paul Allen of the Portland Trail Blazers voting against the move. The approval means the Sonics could move to Oklahoma City's Ford Center for the 2008-2009 season if it can break at its lease with KeyArena after paying a $30 million relocation fee.

Lawsuits

City of Seattle v. Professional Basketball Club LLC

Seattle filed a lawsuit on September 23, 2007 in an attempt to keep the Sonics from leaving before the end of their lease in 2010. The trial was set for June 16, 2008. On April 10, 2008, the city of Seattle asked the Federal District Court to order the NBA to release documents related to the financial situation of each team, the claim that the SuperSonic's lease with KeyArena is financially unworkable, and documents associated with the league's involvement in requiring PBC to make a good-faith effort to stay in Seattle. On April 28, the trial's presiding judge ruled that the NBA must supply the internal documents about the possible relocation of the Sonics that they had the city of Seattle had requested. In addition the judge said that Stern could be deposed at a later day should the need arise. The city hopes the documents will aid in building its legal case, and cited an email conversation among members of the ownership group that suggested they were privately discussing intent to move the team while publicly insisting that they would not attempt to do so.

The ownership group filed a motion saying that the lawsuit and the release of the emails by the city were meant to drive up the cost of leaving Seattle and force the ownership group to sell the team. The motion requested that all emails and other records be released to the team. Slade Gorton, lead attorney for the city, responded by pointing out that it was PBC that started the fight that led to the lawsuit when they filed for arbitration to break the lease. The motion was denied by the presiding judge, who said the team failed to make a "good-faith effort" to resolve the dispute and that it failed to show that trial preparations were hindered by the records not being made public. However, the ruling also said the team could bring up the issue again if it can prove the relevance or the confidentiality of the records. As part of a strategy to show that Seattle no longer cares for the Sonics, the Sonics' attorneys were able to get Seattle Mayor Greg Nickels to admit that he was not aware of a specific company that planned on moving to the city because of the Sonics, but the mayor noted the presence of professional sports teams were a sign of "a great city". When asked if the team's departure from KeyArena would ameliorate the "Mercer Mess", Nickels said, "Well, we would have 41 evenings that would be less congested on the Mercer Street, yes."

On April 21, 2008, Gorton said he would be open to a settlement if the league promised a replacement team for Seattle. He said it was "highly unlikely" that the Sonics would stay and indicated the city should instead focus on gaining a replacement team, but noted that local governments would need to be willing to fund an expansion of KeyArena first.

When Bennett's group requested that the trial also decide the team's financial obligations to KeyArena should its lease be broken, Seattle's lawyers requested six month delay in the trial date in order to prepare for the additional issues, arguing that the ownership group's request would "dramatically change the scope" of the case and would require considerable preparation time to determine damages. The trial's presiding judge denied the motion by Bennett's group on March 6, noting that the team would have needed to make the request at the scheduling conference. A second trial would therefore need to be held to determine the team's financial obligations.

Basketball Club of Seattle LLC et al v. Professional Basketball Club LLC

The release of email conversations between members of Bennett's group, as well as the NBA's concern that Bennett had violated his good faith clause , prompted former Sonics owner, Howard Schultz, to file a lawsuit that seeks to rescind the sale of the team, alleging Bennett's group used fraud and misrepresentation to purchase the team and did not make the "good faith best effort" to keep the Sonics in Seattle as mandated by the sales contract. Bennett said the emails were misinterpreted and that he has spent millions of dollars in attempting to keep the team in Seattle and legal experts contacted by the Seattle Post-Intelligencer prior to details of the suit becoming known said Schultz's lawsuit was highly unlikely to succeed.

The lawsuit was filed on April 22, 2008 at the U.S. District Court for the Western District of Washington. It seeks, among other things, that the court grant an injunction preventing the Sonics being relocated from Seattle to Oklahoma City. The suit further requests that the franchise be placed in a constructive trust and no longer in the ownership of PBC. On May 20, 2008, Schultz's attorney added alleged breach of contract as a third cause of action against Bennett. Chicago-based attorney and ESPN senior writer Lester Munson said that while the remedies Schultz sought were "without precedent in the sports industry", he did believe that both the Schultz case and Seattle's lease case presented "serious problems" for Bennett, and the cases had a better than 50 percent chance of winning.

On May 9 2008, Oklahoma City officials declared intent to sue for damages and a forced relocation of the Supersonics if Howard Schultz's lawsuit to rescind the sale of the team succeeds and the subsequent ownership does not relocate. In a legal letter to Schultz, Oklahoma City's attorney said that the Sonics are legally bound to relocate to Oklahoma City at the end of the KeyArena lease regardless of who owns the team. The letter stated that the city has "valid and enforceable agreements with the Team requiring it relocate to Oklahoma City at the end of the current lease with the City of Seattle.” Richard Yarmuth, Schultz's attorney, said that the letter affects "neither the purpose, the prosecution or the likely outcome" of the lawsuit.

References

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  42. Munson, Lester (April 22 2008). "E-mails key in Schultz's suit to reverse Sonics sale". ESPN.com. Retrieved 2008-04-22. {{cite web}}: Check date values in: |date= (help)
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